Credit union regulator funds get clean audit opinions for 2019; top agency challenges also noted

The four funds administered by the federal regulator of credit unions – the National Credit Union Share Insurance Fund (NCUSIF), the agency’s operating fund, the Central Liquidity Facility (CLF), and the Community Development Revolving Loan Fund (CDRLF) – received clean, or unmodified, audit opinions for the years ending Dec. 31, 2019, and 2018, the agency said Friday.

The audited statements were released Friday by the National Credit Union Administration (NCUA) Office of Inspector General (OIG), which monitored the audit performed under contract by KPMG LLP. The audit report includes an opinion on the financial statements, conclusions on internal control over financial reporting, and a section addressing compliance and other matters.

In the report released Friday, the OIG said the auditing firm found:

  • The funds’ financial statements were fairly presented, in all material respects, in conformity with U.S. generally accepted accounting principles;
  • There were no material weaknesses in internal controls;
  • There were no significant deficiencies related to internal controls; and
  • There were no instances of reportable noncompliance with laws and regulations it tested or other matters that are required to be reported under government auditing standards or Office of Management and Budget (OMB) guidance.

The OIG report also includes the office’s assessment of top management and performance challenges it sees for the agency in the coming year. For 2020, those challenges include cyber threats, technology-driven changes to the financial landscape, interest-rate risk, membership trends, and challenges facing smaller credit unions and industry consolidation.

An aging demographic remains a key challenge within membership trends, the report explains. “Although overall credit union membership continues to grow strongly, close to half of federally insured credit unions had fewer members at the end of the third quarter of 2019 than a year earlier,” IG James Hagen wrote in a letter included with the report to the agency board members. “All credit unions need to consider whether their product mix is consistent with their members’ needs and demographic profile and I am encouraged that the NCUA has taken action that will allow for continued growth.”

Among those actions, Hagen wrote, were the agency’s updated field-of-membership rules and consolidation of many of the agency’s functions into a single office that provides technical assistance to credit unions (the Office of Credit Union Resources and Expansion). This office helps credit unions with chartering, field of membership, grants and loans training, and the preservation programs for minority credit unions. “These actions should produce greater efficiencies, allowing the NCUA to facilitate better growth opportunities for credit unions,” wrote Hagen.

NCUA 2019 Financial Statement Audits